From Hackers to Security Experts, Balkan IT Sector Booms

BUCHAREST— After hacking the Pentagon, NASA and Britain's Royal Navy for fun, TinKode got a real job as a computer security expert for a Romanian cyber safety consultancy.

TinKode was the name used by Romanian Razvan Cernaianu when he revealed security holes in government and corporate systems across the world, earning him a two-year suspended prison sentence.

"I was really passionate about carrying out what I call security audits," Cernaianu told Reuters. "It's a hobby, so I did it for free. Moreover, I've always sent emails to those institutions to fix their problems."

Cernaianu, 21, is an example of a deep well of talent in Romania and Bulgaria. They may be the European Union's two poorest members, but their low labor costs, skilled workers and strategic location are underpinning a technology boom.

Multinational companies are using their expertise for customer support, software development and business process outsourcing. Oracle, SAP, IBM, Hewlett Packard and Siemens all have business centers or operations in the region.

The expertise is partly accidental — in the 1980s, Romania's communist dictator Nicolae Ceausescu backed computer research and technical education to promote pride in the nation. Piracy flourished after the 1989 revolution as people who could not afford proprietary content bought cheap copies instead.

Exceptional growth

On the other side of the Danube, Bulgaria's communists focused on hardware, at one point producing and supplying 40 percent of all computers used in the Soviet bloc.

The tech sector accounts for up to 10 percent of the two economies, according to business associations — a rare bright spot in the recession-hit Balkan region.

Growth of the Romanian and Bulgarian IT sectors far outpaced the rest of ex-communist Europe, jumping by 45 percent and 80 percent respectively since their 2007 EU entry. Meanwhile, the tech sectors in Poland, Hungary and the Czech Republic each grew by about 20 percent.

Romania's tech sector achieved year-on-year growth of 40 percent in the final quarter of 2012, which helped the country to avoid slipping back into recession.

Cernaianu, one of the world's most-wanted hackers until his arrest last year after a joint investigation by Romanian police, the FBI and NASA, now has a well-paid job and is co-owner of computer network security company CyberSmartDefence.

But the dirty side of the expertise still lingers.

Working from a tidy desk in a downtown Bucharest office, Cernaianu is from the same generation as the youngsters responsible for the Romanian town of Ramnicu Valcea becoming known as a global hacking hub.

Romanian hackers stole about $1 billion from U.S. accounts in 2012, according to the U.S. embassy in Bucharest. A report by Verizon this week said that Romania is the world's second-biggest hacking center behind China.

The FBI has even set up an office in Romania and helped to train specialist police agents.

Cernaianu says he never attacked a computer to steal money.

"We won't hire thieves," said CyberSmartDefence CEO Madalin Dumitru. "We're not afraid of such people [as Cernaianu]; we use their intelligence and expertise."

Brain drain

The investment in business outsourcing has created an estimated 15,000 jobs in Bulgaria, where an otherwise depressed economy has sparked nationwide protests that toppled the government in February.

"Why would you choose Bulgaria? Because it offers complex outsourcing and high-end software solutions," said Plamen Tilev, managing director of SAP Labs Bulgaria, which develops core software for the Germany company. "For low-end solutions, like code writing and checking, you'd go to east Asian countries."

The biggest fear is that Romania and Bulgaria become victims of their own success and suffer a brain drain. Tens of thousands of Romanians and Bulgarians have already left to work as IT specialists in the United States.

The populations of the two countries have plunged in the past decade and companies are pushing the governments to improve education, train more engineers and make it easier to bring in workers from neighbors such as Moldova, Serbia, Macedonia and Ukraine.

"There has been zero unemployment in the sector in the past 10 years," said Elena Marinova, who runs software business Musala Soft, which is now struggling to find qualified staff despite salaries about three times the national average.

Bulgarian universities produce about 2,000 IT specialists a year, but the industry says it creates 6,000 jobs a year in the country.

"The software industry is struggling to breathe because of the lack of people," said Petar Statev, head of the Bulgarian business association ICT Cluster.

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